United States Office of Air and Radiation March 2011

Environmental Protection Agency

_____________________________________________________________________________________________



## GUIDANCE FOR DETERMINING BEST AVAILABLE CONTROL TECHNOLOGY F OR REDUCING CARBON DIOXIDE EMISS IONS FROM BIOENERGY PRODUCTION

## Guidance for Determining Best Available Control

Technology for Reducing Carbon Dioxide Emissions from

Bioenergy Production

Prepared by the U.S. Environmental Protection Agency Office of Air and Radiation Washington, DC

March 2011Disclaimer

This document explains the requirements of EPA regulations, describes EPA policies, and recommends procedures for permitting authorities to use to ensure that permitting decisions are consistent with applicable regulations. This document is not a rule or regulation, and the guidance it contains may not apply to a particular situation based upon the individual facts and circumstances. This guidance does not change or substitute for any law, regulation, or any other legally binding requirement and is not legally enforceable. The use of non

- mandatory language such as “guidance,” “recommend,” “may,” “should,” and “can,” is intended to describe EPA poli cies and recommendations. Mandatory terminology such as “must” and “required” are intended to describe controlling requirements under the terms of the Clean Air Act and EPA regulations, but this document does not establish legally binding requirements in and of itself.2 

### Table of Contents
I. I ntroduction
II. CO 2 Emissions from Bioenergy and the Carbon Cycle III. EPA‟s Previous Actions Relating to Application of PSD Program to Biogenic CO 2 Emissions
IV. Summary of the Top

- Down BACT Process
V. Step 1 of the Top

- Down BACT Process A. Traditional Application of Step 1 B. Previous EPA Guidance on GHG Control Strategies C. Application of Step 1 to Bioenergy Facilities
VI. Step 2

– Eliminate Technically Infeasible O ptions
VII. S tep 3

– Rank Remaining Control T echnologies
V III. Step 4

– Energy, Environmental, and Economic Impacts A. Traditional Step 4 Considerations 1. Environmental impacts 2. Economic impacts 3. Energy impacts B. Specific Considerations at Step 4 for Bioenergy Facilities 1. Environmental impacts 2. Economic impacts 3. Energy impacts C. Potential C o nclusions in Step 4 Analysis
I X. Step 5

– Selecting BACT3

I. Introduction This guidance provides an illustration of reasoning that a Prevention of Significant Deterioration ( PSD ) permitting authority may use to support the conclusion that the best available control technology (BACT) for carbon dioxide ( CO 2 ) emissions at a bioene rgy facility 1
is the combustion of biogenic fuels by itself . As of Ja nuary 2, 2011 , greenhouse gases ( GHG ) , including CO 2 , became a pollutant subject to regulation under the Clean Air Act ( CAA )

. 2 Under existing PSD program regulations and EPA interpretations of those regulations, stationary sources of air pollution that require a PSD permit to authorize construction, 3 and that would have the potential to emit (or would increase GHG emissions by) 75,000 tons CO 2 equivalent (CO 2 e ) per year (tpy) or more or are requesting to increase GHG emissions by 75,000 tons CO 2 e per year (tpy) but that did not obtain such a permit prior to January 2, 2011, 4 will need to demonstrate to the appropriate reviewing authority 5 that the proposed facility will meet GHG emission limitations through application of BACT

. 6 To assist PSD permit applicants and reviewing authorities with making this determination, EPA pro vided guidance on November 10,

1 A „bioenergy facility‟ is defined, for the purposes of this guidance, as a facility that generates energy via the combustion of biologically

- derived material other than fossil fuels , for example wood , biosolids, or agricultural products . This could be undertaken eith er alone or in addition to traditional fossil fuels. 2 75 FR 17004 (April 2, 2010); 75 FR 31514 (June 3, 2010). 3 On June 3, 2010, EPA issued a final rule that “tailors” the applicability provisions of the PSD and title V programs to enable EPA and state s to phase in permitting requirements for GHGs in a common sense manner (“Tailoring Rule”). The first Tailoring Rule step begins on January 2, 2011, and ends on June 30, 2011, and this step covers what EPA has called “anyway sources” and “anyway modificat ions” that would be subject to PSD “anyway” based on emissions of pollutants other than GHGs. The second step begins on July 1, 2011, and continues thereafter to cover both anyway sources and certain other large emitters of GHGs. 4 75 FR 17021 (April 2, 2010); 75 FR 31526 (June 3, 2010) 5 This may be EPA or a state or local government authority depending on the status of implementation. See 75 FR 77698 (December 13, 2010); 75 FR 81874 (December 29, 2010); 75 FR 82246

- 82536 (December 30, 2010); 76 FR 752 (January 6, 2011); 76 FR 2070 (January 12, 2011); 76 FR 2581 (January 14, 2011); 76 FR 2591 (January 14, 2011). 6 40 CFR 52.21(b)( 49)

- (50); 40 CFR 51.166(b)(48)

- (49); 40 CFR 52.21(b)(12); 40 CFR 51.166(b)(12); 40 CFR 52.21(j)(2)

- (3); 40 CFR 51.166(j)(2)

- (3); 75 FR 17004 (April 2, 2010); 75 FR 31514 (June 3, 2010).4

2010 entitled PSD and Title V Permitting Guidance for Greenhouse Gase s ( “2010 GHG Permitting Guidance”) , 7 which includes a section on determining BACT for GHG. In addition to the November 10, 2010 guidance EPA also released technical white papers 8 for several industry
sectors. Any stationary source, including a bioenergy facilit y , that quali fies as a major stationary source required to obtain a PSD permit must address the BACT requirement for GHGs if it emits or increases its emission of this regulated pollutant in amounts greater tha n 75,000 tons on a
CO 2 e basis

. 9 This guidance on determining BACT for CO 2 emission s from a bioenergy facility is intended to supplement the 2010 GHG Permitting Guidance, and not to supersede i t. This guidance applies to sources that generate energy from biologically

– based material , and it does not apply to other sour ces that may emit biogenic CO 2 but do not generate energy from the biological material

. For the sources with biogenic emissions not covered by this guidance document, one should consult the 2010 GHG Permitting Guidance and prior guidance EPA has provided on the top

- down BACT process. Concurrent with the release of this guidance, EPA is issuing a proposed rule to defer application of PSD permitting requirements to CO 2 emissions from biologically

- based material (biogenic CO 2 emissions) for a three

- year period. The scope of the proposed deferral is wider than the scope of this guidance: the deferral is intended to cover all sources of biogenic CO 2 emissions, including those that emit CO 2 from biologically

- based material but do not generate energy from it. EPA expect s to take final action on the proposed deferral rule in the July 2011 timeframe. In the event that EPA finalizes the deferral for the PSD program as proposed, states may require

7 http://www.epa.gov/nsr/ghgdocs/epa

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- 07; 40 CFR 52.21(b)(49); 40 CFR 52.166(b)(48).5

additional time to review their state laws to incorporate the deferral established by that rule. To the extent no such deferral is available under the PSD permitting regulations applicable at t he time a permitting authority issues a PSD permit for a bioenergy facility, the reasoning described below may be used on an interim basis to support a conclusion in such a permit that BACT for
CO 2 is combustion of biomass fuels alone.
T his document does not provide a final determination of BACT for a particular source, since such determinations can only be made by individual permitting authorities on a case

- by

case basis after consideration of the record in each case. Upon considering the record in an
i ndividual case, if a permitting authority has a reasoned basis to address particular issues discussed in this document in a different manner than EPA recommends here, permitting authorities (including EPA) have the discretion to do so in decisions on indiv idual permit applications consistent with the relevant requirements in the CAA and regulations. However, EPA believes the analysis described below will be sufficient in most cases to support the conclusion that utilization of biomass fuel alone is BACT f or a bioenergy facility. It is also important to note that this guidance is meant to be interim guidance only and that once EPA completes the detailed examination of the science and technical issues associated with accounting for biogenic CO 2 emissions from stationary sources, as discussed in the proposed deferral, those analyses may outweigh many of the considerations mentioned in this guidance.
II. CO 2 Emissions from Bioenergy and the Carbon Cycle Carbon dioxide emissions from bioenergy f acilities are generated during the combustion of biologically

- based material ( e . g. , forest or agricultural products) for energy. The term „CO 2 emissions from bioenergy‟ is used in this guidance to describe biogenic CO 2 emissions from a6

stationary source that directly result from the combustion of biologically

- based materials other than fossil fuels when these materials are used to generate energy

. Although e very molecule of
CO 2 has the same radiative forcing in the atmosphere regardless of its source , CO 2 emissions from bioenergy merit unique consideration in the BACT analysis because land

- based biomass carbon stocks can be replenished more quickly than fossil fuel carbon stocks, and thus these biogenic carbon stocks can act as a sink on a shorter time scale than fossil carbon. For example,

m any coal deposits in North America originated hundreds of millions of years ago. In contrast, the reservoirs of carbon found on the surface of Earth, in pools such as tree biomass and cropland soils, have accumulat ed over decades, not millennia. Through relatively rapid photosynthesis, plants absorb CO 2 from the atmosphere and add it to their biomass, which contains roughly 50% carbon by weight, through a process called sequestration. When biological material such as plant biomass is harvested or cleared from the land and burned for energy, the material acts as a source of carbon, releasing its stored carbon back to the atmosphere as CO 2 . Over large spatial scales such as states, regions, or continents, if more carbon is sequestered in plant biomass than is emitted to the atmosphere through processes

su ch as harvest, fire, or natural decomposition, plant biomass acts as a net sink for carbon. Conversely, if more carbon is released than is sequestered, plant biomass acts as a net source for carbon. EPA‟s Inventory of U.S. Greenhouse Gas Emissions and S inks (the Inventory) 10 tracks annual GHG emissions and sinks including emissions of CO 2 , methane ( CH 4 ) , nitrous oxide ( N 2 O ) , hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF 6 ). That report estimates all anthropogenic sources and sinks of GHG emissions at the national

10 US EPA. 2010. Inventory of U.S Greenhouse Gas Emissions and Sinks: 1990

- 2008. U.S. EPA #430

- R

- 10

- 06.7

scale, classified into six broad sectors: Energy, Industrial Processes, Solvents and Other Product Uses, Agriculture, Land

- Use, Land

- Use Change and Forestry ( LU LUCF), and Wast e . The Energy Sector includes all GHGs emitted during the production, transformation, handling and consumption of energy commodities , including fuel combustion. The LU LUCF Sector includes emissions and sequestration resulting from human activities that influence the way land is used or that affect the size of carbon stocks on land. Thus, at the national level, CO 2 emissions from biomass combustion are not included in the estimate of emissions from a country‟s Energy Sector, even though the emissions phys ically occur at the time and place in which useful energy is being generated ( e.g. , power plant or automobile). Averaged over the years 1990

- 2008, data from the Inventory show that the LUCF sector in the United States has been a net sink of 841 Teragram s carbon dioxide equivalent (CO 2 e) per
year. 11 This sink is roughly 12% of the average gross emissions from all other sources combined in the United States over the same time period . F uture national projections under business as usual (BAU), as reported in the Fifth U.S Climate Action Report (CAR) submitted to the UNFCCC in 2010, suggest that this LUCF sink is likely to continue, if not increase in size, at least until 2020. 12 Biogenic CO 2 emissions are distinct from other regulated pollutants at bioenergy facilities because, unlike other pollutants and other GHGs, CO 2 emissions can participate directly in the global carbon cycle through photosynthesis, which is critical for the maintenance of life on Earth. Further, emissions of CO 2 can dwarf emissions of oth er GHGs from biomass combustion. For example, CO 2 makes up 97.9% of the global warming potential (GWP) of the GHG

11 See Tables 1 and 2 in Appendix. 12 U.S. Climate Action Report 2010. Fifth National Communication of the United States of America under the United National Framework Convention on Climate Change. Chapter 5 Projected Greenhouse Gas Emissions, page 81. www.state.gov/documents/organization/140636.pdf8

emissions from wood and wood residuals

. 13 Finally, because sequestration of CO 2 emissions in living plant material outside the boundaries of the facility may counteract the emissions from such facilities on a continuous basis, this unique dynamic merits consideration in the BACT analysis. This argument is underlined by the fact that GHGs such as CO 2 are well

- mixed in the atmosphere at larg e spatial scales; therefore, the need to reduce them directly at the facility is of lesser importance so long as their net atmospheric impact is accounted for and is negative or

zero. III. EPA’s Previous Actions Relating to Application of the PSD Program to Biogenic CO 2 Emissions On the basis of the Inventory results described above and other considerations, stakeholders have requested that EPA exclude, either partially or wholly, biogenic CO 2 emissions for the purposes of the BACT analysis and th e PSD program based on the view that the biological material used to generate energy can also serve as a sink for carbon

. In its notice proposing the PSD and Title V Greenhouse Gas Tailoring Rule , EPA referenced the Inventory for the applicable global war ming potential ( GWP ) values and guidance on how to calculate a source‟s GHG emissions in tons per year (tpy) CO 2 e. While EPA referred to the Inventory for GWP identification purposes only, several commenters appeared to misunderstand our intent. The narr ow reference to the use of GWP values for estimating GHG emissions was provided to offer consistent guidance on how to calculate these emissions and was not intended as an indication, direct or implied , that bio genic emissions would be excluded from permit ting applicability merely by association with the national I nventory. 14 As noted above, the Inventory

13 See CO 2 , CH 4 and N 2 O GWPs in Table A

- 1 of 40 CFR Part 98 Subpart A; and emission factors for CO 2 , CH 4 and N 2 O from combustion of wood and wood residuals in Tables C

- 1 and C

- 2 of 40 C FR Part 98 Subpart C. 14 See 74 FR 55351, under the definition for „carbon dioxide equivalent‟9

does not exclude these emissions, but simply includes them in the LUCF Sector rather than the Energy Sector to avoid double

- counting at the national scale

. In response, when finalizing the Tailoring Rule, EPA acknowledged the role that biogenic fuels and feedstocks could play in reducing anthropogenic GHG emissions, and did not dispute the commenters‟ observations that many state, federal, and international rules and policies treat biogenic sources and fossil sources of CO 2 emissions differently. 15 Nevertheless, we determined that we lacked a sufficient record at that time to apply the legal rationales utilized in the Tailoring Rule to exclude emissions of CO 2 from biogenic sources in determining permitting applicability provisions. At that time, we had not requested and did not obtain public comments addressing the particular administrative burden of permitting projects that specifically involve biogenic CO 2 emissions from energy production

. Alt hough EPA did not promulgate an applicability excl usion for biogenic emissions in the final Tailoring Rule, EPA did observe that flexibility exists to apply the existing regulations and policies regarding BACT in ways that take into account their net effects on atmospheric GHG concentrations. In order to explore the issue further following the promulgation of the Tailoring Rule, in July 2010 EPA solicited views from the public through a Call for Information (CFI) on approaches to accounting for biogenic emissions, including whether some or all of a source' s biogenic CO 2 emissions could be discounted based on a determination that they are canceled out by the CO 2 absorption associated with growing the fuel . Also, we solicited information on the means to estimate and measure CO 2 emissions from a variety of bi ogenic fuels. EPA issued its PSD and Title V Permitting Guidance for Greenhouse Gases on November 10, 2010 (“2010 GHG Permitting Guidance”) , which discusses the basic information

15 See 75 FR 31514.10

that permit writers and applicants need to address GHG emissions in permits. 16 To assist permitting authorities carrying out BACT analyses for GHG s pending further EPA action, the guidance indicated that permitting authorities may consider the environmental, energy and economic benefits that may accrue from the use of certain types of biogenic fuels ( e.g., biogas from landfills) for energy generation, consistent with existing air quality standards. Noting that a variety of federal and state policies have recognized that some biogenic fuels can be part of a national strategy to reduce dependence on fossil fuels and to reduce emissions of GHGs, EPA determined that it is appropriate for permitting autho rities to account for both existing federal and state policies and their underlying objectives in evaluating the environmental, energy and economic benefits of biogenic fuel s. EPA observed that, based on these considerations, permitting authorities might determine in the GHG component of the BACT analysis for new or modified bioenergy facilities, as defined in Section I , that such utilization of bio genic fuels is inherently BACT for GHGs. To assist permitting authorities further in considering these facto rs, EPA announced its intent to issue guidance that will provide a suggested framework for undertaking an analysis of the environmental, energy and economic impact s of using biogenic
fuels in Step 4 of the top

- down BACT process .
IV. Summary of the Top
- Dow n BACT Process On November 10, 2010, EPA issued the 2010 GHG Permitting Guidance , which supplements prior EPA guidance on determining BACT, including EPA‟s 1990 Draft New Source Review Workshop Manual (“1990 Workshop Manual”)

. 17 In the 2010 GHG Permitting

16 PSD and Title V Permitting Guidance for Greenhouse Gases . Prepared by EPA staff. November 2010. Available at: http://www.epa.gov/nsr/ghgdocs/epa

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- 0001.pdf ; “New Source Review Workshop Manual; Draft.” October 1990. Available at: http://www.epa.gov/ttn/nsr/gen/wkshpman.pdf

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Guidance, EPA recommends that permitting authorities continue to use the Agency‟s five

- step “top

- down” BACT process to determine BACT for GHGs. In brief, the top

- down process calls for all available control technologies for a gi ven pollutant to be identified and ranked in descending order of control effectiveness. A p ermit applicant should first examine the highest

ranked (“top”) option. The top

- ranked option (s) should be established as BACT unless the permit applicant demonstr ates to the satisfaction of the permitting authority that technical considerations, or energy, environmental, or economic impacts justify a conclusion that the top

ranked technology is not “achievable” in that case. If the most effective control strategy is eliminated in this fashion, then the next most effective alternative should be evaluated, and so on, until an option is selected as BACT

. 18 T his analysis should be conducted for each regulated NSR pollutant that is subject to the BACT requirement in a g iven case. EPA has broken down this analytical process into the following five steps, some of which are discussed in detail later in this section.
Step 1: Identify all available control technologies. Step 2: Eliminate technically infeasible options

. Step 3: Rank remaining control technologies

. Step 4: Evaluate most effective controls and document results

. Step 5: Select BACT

. For additional detail on this process, consult the 2010 GHG Permitting Guidance and references contained therein. As thi s guidance focuses on unique considerations for bioenergy facilities, the discussion that follows elaborates only on those steps where EPA believes such considerations are most likely to arise.

18 2010 GHG Permitting Guidance at 18.12

V. Step 1 of the Top
- Down BACT Process A. Traditional Applic ation of Step 1 The first step in the top

- down BACT process is to identify all available control options. Available control options are those air pollution control technologies or techniques (including lower

- emitting processes and practices) that have the potential for practical application to the emissions unit and the regulated pollutant under evaluation. They typically include the application of alternative production processes, methods, systems, and techniques, including clean fuels or treatment or inn ovative fuel combustion for control of the affected pollutant. 19 However, w hile Step 1 is intended to capture a broad array of potential options for pollution control, this step of the process is not without limits. EPA has recognized that a Step 1 list of options need not necessarily include inherently lower polluting processes that would fundamentally redefine the nature of the source proposed by the permit applicant. 20 BACT should generally not be applied to regulate the applicant‟s purpose or objectiv e for the proposed facility. In assessing whether an option would fundamentally redefine a proposed source, EPA recommends 21 that permitting authorities apply the analytical framework recently articulated by the Environmental Appeals Board. 22 The underlyin g record will be an essential component of a

19 See pages 25

- 34 of “ PSD and Title V Permitting Guidance for Greenhouse Gases .” (November 2010) for more general background on Step 1 of the top

- down process. 20 In re Prairie State Generating Company , 13 E.A.D. 1, 23 (EAB 2006). 21 See, generally, In the Matter of American Electric Power Service Corporation, Southwest Electric Power Company, John W. Turk Plant , Petition No. VI

- 2008

- 01 (Order on Petition) (December 15, 2009) (title V order referencing and applying framework developed by the EAB) ; In the Matter of Cash Creek Generation, LLC , Petition Nos. IV

- 2008

- 1 & IV

- 2008

- 2 (Order on Petition) (December 15, 2009) (same). 22 The EPA Environmental Appeals Board has applied this framework for evaluating redefining the source q uestions in three cases involving coal

- fired power plants. In re Desert Rock Energy Company , PSD Appeal No. 08

- 03 et al. (EAB Sept. 24, 2009); In re Northern Michigan University , PSD Appeal No. 08

- 02 (EAB Feb. 18, 2009); In re Prairie State Generating Comp any , 13 E.A.D. 1 (EAB 2006). For additional examples of how EPA approached the redefining the source issue in the context of power plants prior to developing this analytical framework, see the following decisions. In re Old Dominion Electric Cooperative , 3 E.A.D. 779 (Adm‟r 1992); In re Hawaiian Commercial & Sugar Co. , 4 E.A.D. 95 (EAB 1992); In re SEI Birchwood Inc ., 5 E.A.D. 25 (EAB 1994). EPA also considered this issue in the context of waste incinerators prior to developing the recommended analytical fr amework. In re Pennsauken , 2 E.A.D. 667 (Adm‟r 1988); In the Matter of Spokane Regional Waste

- to

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supportable BACT determination that a candidate control technology redefines the source. 23 The “redefining the source” issue is ultimately a question of degree that is within the discretion of the permitting auth ority. Ultimately, any decision to exclude an option on “redefining the source” grounds must be explained and documented in the permit record, especially where such an option has been identified as significant in public comments. 24 The 2010 GHG Permitting
G uidance provides more information that permit writers and applicants may consult on this topic. The CAA includes “clean fuels” in the definition of BACT. 25 While clean fuels that would reduce GHG emissions should be considered, EPA has recognized that the initial list of control options for a BACT analysis does not need to include “clean fuel” options that would fundamentally redefine the source. Such options include those that would require a permit applicant to switch to a primary fuel type ( e.g. , coal, natural gas, or biomass) other than the type of fuel that an applicant proposes to use for its primary combustion process

. B. Previous EPA Guidance on GHG Control Strategies As EPA discussed in the 2010 GHG Permitting G uidance, for the purposes of a BACT analysis for GHGs, EPA classifies carbon capture and seques tra tion as an add

- on pollution control technology 26 that is “available” 27 for large CO 2 - emitting facilities including fossil fuel

-

Facility , 2 E.A.D. 809 (Adm‟r 1989); In the Matter of Brooklyn Navy Yard Resource Recovery Facility , 3 E.A.D. 867 (EAB 1992); In re Hillman Power Co., LLC , 10 E.A.D. 673, 684 (EAB 2002). In another case, EPA considered this question in the context of a conversion of a natural

- gas fired taconite ore facility to a petcoke fuel. In re Hibbing Taconite Co ., 2 E.A.D. 838 (Adm‟r 1989). For an example of the ap plication of this concept to a fiberglass manufacturing facility, see In re Knauf Fiber Glass , 8 E.A.D 121 (EAB 1998). 23 In re Desert Rock Energy Company , PSD Appeal No. 08

- 03 et al. (EAB Sept. 24, 2009), slip op. at 65, 76. 24 In re Desert Rock Energy Comp any , slip op. at 70

- 71, 76

- 77; In the Matter of Cash Creek Generation , Order at 7

- 10. 25 42 USC 7579(3). EPA has not yet updated the definition of BACT in the PSD regulations to reflect the addition of the “clean fuels” language that occurred in the 1990 amendments to the Clean Air Act. 40 CFR 52.21(b)(12); 40 CFR 51.166(b)(12). Nevertheless, EPA reads an d applies its regulations consistent with the terms of the Clean Air Act. 26 EPA recognizes that CCS systems may have some unique aspects that differentiate them from the types of equipment that have traditionally been classified as add

- on pollution control s ( i.e., scrubbers, fabric filters, electrostatic precipitators). However, since CCS systems have more similarities to such devices than inherently14

fired power plants and industrial facilities with high

- purity CO 2 streams ( e.g., hydrogen production, ammonia production, natural gas processing, ethanol production, ethylene oxide production, cement production, and iron and steel manufacturing). For these types of facilities, CCS should be listed in Step 1 of a to p - down BACT analysis for GHGs. This does not necessarily mean CCS should be selected as BACT for such sources, since other considerations such as technical feasibility or economic impacts may justify elimination of such options at later steps of the proce ss. In addition, EPA has observed that the application of methods, systems, or techniques to increase energy efficiency is a key GHG

- reducing opportunity that falls under the category of “lower

- polluting processes/practices.” Use of inherently lower

- e mitting technologies, including energy efficiency measures, represents an opportunity for GHG reductions in these BACT reviews. EPA has encouraged permitting authorities to use the discretion available under the PSD program to include the most energy effi cient options in BACT analyses for both GHG and other regulated New Source Review ( NSR ) pollutants. Since the use of add

- on controls to reduce GHG emissions is not as well

- advanced as it is for most combustion

- derived pollutants,

lower

- polluting processes, EPA believes that CCS systems are best classified as add

- on controls for purpose s of a top

- down BACT analysis. 27 As noted above, a control option is “available” if it has a potential for practical application to the emissions unit and the regulated pollutant under evaluation. Thus, even technologies that are in the initial stages of full development and deployment for an industry, such as CCS, can be considered “ available ” as that term is used for the specific purposes of a BACT analysis under the PSD program. In 2010, the Interagency Task Force on C arbon Capture and Storage was established to develop a comprehensive and coordinated federal strategy to speed the commercial development and deployment of this clean coal technology. As part of its work, the Task Force prepared a report that summarizes the state of CCS and ident ified technical and non

- technical challenges to implementation. EPA, which participated in the Interagency Task Force , supports the Task Force ‟ s recommendations concerning ongoing investment in demonstrations of the CCS technologies based on the report ‟ s conclusion that: “ Current technologies could be used to capture CO 2 from new and existing fossil energy power plants; however, they are not ready for widespread implementation primarily because they have not been demonstrated at the scale necessary to est ablish confidence for power plant application. Since the CO 2 capture capacities used in current industrial processes are generally much smaller than the capacity required for the purposes of GHG emissions mitigation at a typical power plant, there is cons iderable uncertainty associated with capacities at volumes necessary for commercial deployment. ” See Report of the Interagency Task Force on Carbon Capture and Storage , p.50 ( http:// www.epa.gov/climatechange/policy/ccs_task_force.html ).15

i nitially, in many instances energy efficient measures may serve as the foundation for a BACT analysis for GHGs with add

- on pollution control technology and other strategies added as they become more accessible.
C . Application of Step 1 to Bioenergy Facil ities At the outset, when considering an application to construct or modify a bioenergy facility, it will be important to address the extent to which the BACT analysis for GHGs should include comparative evaluation of biogenic fuels and other types of fuel s, including fossil fuels. However, where a proposed bioenergy facility can demonstrate that utilizing a particular type of biogenic fuel is fundamental to the primary purpose of the project, then at the first step of the top

- down process, permitting auth orities can rely on that to determine that use of another fuel would redefine the proposed source. To the extent this showing is made by a permit applicant propos ing to construct or modify an electric generating facility that would utilize biomass fuels alone in the primary production process, the options listed a s Step 1 of a top

- down BACT analysis for GHGs may be limited to (1) utilization of biomass fuel alone , (2) energy efficiency improvements, and (3) carbon capture and sequestration if the source meets the characteristics summarized above and describe d in more detail in the 2010 GHG Permitting G uidance.
In cases where a permit applicant proposes to co

- fire o r combine biomass fuels with another primary fuel type, the list of BACT options should include the option of utilizing both types of primary fuels in different combination s . If the applicant proposes a specific proportional allocation or fuel mix (i.e. , < 5 percent biomass, > 95 percent fossil fuel) and believes other allocations should be eliminated from consideration in the BACT analysis for GHGs, the permit application should provide an explanation as to why the particular allocation desired by16

the appli cant is necessary to achieve a fundamental business objective of the project. If the permit applicant is unable to demonstrate that a different allocation of primary fuels would fundamentally redefine the proposed source, the options at Step 1 should inc lude varying allocations of the two primary fuels if the proportional allocation of fuels has the potential to affect the amount of GHGs emitted from the facility or the net atmospheric GHG concentrations. Although not necessarily a bioenergy facility, recovery furnaces at kraft pulp and paper mills may not have the option of considering alternative fuels. T he f undamental purpose of recovery furnaces us ed at this type of facility is to recover and regenerate the cooking chemicals (used in the pulping pr ocess) from the spent liquor or “black liquor” exiting the digesters and evaporators. As a secondary benefit, this process also produces energy. Requiring such a recovery furnace that is fully integrated into the production process to utilize a fuel oth er than the black liquor to generate this energy would frustrate the primary purpose of these furnaces to recover and regenerate the cooking chemicals. Thus, EPA believes the option of using alternative fuels in a recovery furnace would fundamentally red efine this type of unit. Facilities proposing to use black liquor in the recovery furnace of the kraft pulping process need not include fuels other than black liquor at Step 1 of a top

- down BACT analysis for such a unit.
VI. Step 2

– Eliminate technically infeasible options Step 2 of the top

- down BACT analysis should be conducted in the same manner for bioenergy facilities as other types of sources. Step 2 is discussed in detail in the 2010 GHG Permitting Guidance. With respect to facilities that are c o - firing biomass and other fuels, if the record shows that an option that involves using a greater proportion of biomass fuels than proposed by the permit applicant is not technically feasible, it may be eliminated from further consideration at this step w ith an appropriate justification.17

VII. Step 3

– Rank remaining control technologies As with Step 2, EPA recommends applying the same consideration in Step 3 of the BACT analysis for a bioenergy facility that would apply to other types of sources. St ep 3 is
discussed in detail in the 2010 GHG Permitting Guidance.

VI II . Step 4

– Energy, Environmental, and Economic Impacts A. Traditional Step 4 Considerations Under Step 4 of the top

- down BACT analysis, permitting authorities must consider the economic, energy, and environmental impacts arising from each option remaining under consideration. Accordingly, after all available and technically feasible control options have been ranke d in terms of control effectiveness (BACT Step 3), the permitting authority should consider any specific energy, environmental, and economic impacts identified with those technologies to either confirm that the top control alternative is appropriate or det ermine it to be inappropriate. The “top” control option should be established as BACT unless the applicant demonstrates, and the permitting authority agrees, that the energy, environmental, or economic impacts justify a conclusion that the most stringent technology is not “achievable” in that case. If the most stringent technology is eliminated in this fashion, then the next most stringent alternative is considered, and so on.
1. Environmental impacts EPA and other permitting authorities have most often u sed this analysis to eliminate more stringent control technologies with significant or unusual effects that are unacceptable in favor of the less stringent technologies with more acceptable collateral environmental effects. However, EPA has also interpret ed the BACT requirements to allow for a more stringent technology to remain in consideration as BACT if the collateral environmental benefits of choosing such a18

technology outweigh the economic or energy costs of that selection. 28 In other words, the permitting authority is not limited to evaluating the impacts of only the “top” or most effective technology but can assess the impacts of all technologies under consideration. 29 The same principle applies when assessing technologies for controlling GHGs.
I n BACT Step 4, the applicant and permitting authority should consider both direct and indirect impacts of the emissions control option or strategy being evaluated. EPA has previously referred to BACT Step 4 as the “collateral impa cts analysis,” 30 but this term is primarily applicable only to the environmental impact analysis. Overall, the Step 4 analysis is more accurately described as an environmental, economic, and energy impacts analysis that includes both direct and indirect ( i .e., collateral) considerations. Since a BACT limitation must reflect the maximum degree of reduction achievable for each regulated pollutant, EPA has emphasized that the environmental impacts analysis in Step 4 should concentrate on impacts other than di rect impacts due to emissions of the regulated pollutant that is the subject of the BACT analysis

. EPA has recognized that consideration of a wide variety of environmental impac ts is appropriate , such as solid or hazardous waste generation, discharges of polluted water from a control device, visibility impacts, demand on local water resources, and emissions of other pollutants subject to NSR or pollutants not regulated under NSR such as air toxics. 31 In discussing the particulars of a BACT analysis for
GH Gs, EPA reiterated in the 2010 GHG Permitting Guidance that the environmental impact

28 In the Matter of North County Resource Recovery Assoc. , 2 E.A.D. at 230

- 31. 29 In re Knauf Fiber Glass, 8 E.A.D. at 131 n. 15. 30 In re Hillman Power, 10 E.A.D. at 683; In the Matter of Columbia Gulf T ransmission Co ., 2 E.A.D. 824, 828 n. 5 (Adm‟r 1989); In re Kawaihae Cogeneration Project, 7 E.A.D. 107, 116

- 17 (EAB 1997). 31 1990 Workshop Manual at B.46; In the Matter of North County Resource Recovery Assoc. , 2 E.A.D. 229, 230 (Adm‟r 1986).; In the Matter of Columbia Gulf Transmission Co ., 2 E.A.D. at 828

.19

analysis should continue to concentrate on impacts other than the direct impacts due to emissions of the regulated pollutant that is the subject of the BACT analysis

. 2

. Economic impacts EPA has previously advised that the economic impacts component of the analysis should focus on direct economic impacts calculated in terms of cost effectiveness (dollars per ton of pollutant emission reduced). This c ost effectiveness s hould be addressed on both an average basis for each measure and combination of measures, and on an incremental basis comparing the costs and emissions performance level of a control option to the cost and performance of the next most stringent control opt ion. 32 The emphasis should be on the cost of control relative to the amount of pollutant removed, rather than economic parameters that provide an indication of the general affordability of the control alternative relative to the source. To justify elimina tion of an option on economic grounds, the permit applicant should demonstrate that the costs of pollutant removal for that option are disproportionately high. 33
3. Energy impacts
E PA has traditionally called for the energy impacts analysis to consider only direct energy consumption and not indirect energy impacts, such as the energy required to produce raw materials for construction of control equipment. 34 Direct energy consumption impacts include the consumption of fuel and the consumption of electrical or thermal energy. This energy impacts analysis should include an assessment of demand for both electricity that is generated onsite and power obtained from the electrical grid, and may include an evaluation of impacts on fuel scarcity or a locally desired fuel mix in a particular area. Applicants and permitting

32 1990 Workshop Manual, Section IV.D.2.b (B.36

– B.44). 33 1990 Workshop Manual at B.31

- 32. 34 In re Power Holdings , PSD Appeal No. 09

- 04 (EAB Aug. 13, 2010), slip op. at 22, n.17 (citing 19 90 Workshop Manual at B.30).20

authorities should examine whether the energy requirements for each control option result in any significant or unusual en ergy penalties or benefits. 35 The costs associated with direct energy impacts should be calculated and included in the economic impacts analysis (i.e., cost analysis). 36

B. Sp e cific Considerations at Step 4 for Bioenergy Facilities
While the more traditional approach that EPA has applied in the Step 4 analysis is to eliminate options from the top

- down BACT analysis based on unacceptable adverse energy, environmental, or economic impacts, this is not the only way to conduct a Step 4 analysis. EPA has recogniz ed a permitting authority is not limited to evaluating the impacts of only the “top” or most effective technology (based on the ranking options based on control of released from the facility) but can assess the impacts of all technologies under considerati on. 37 This approach may include an evaluation of the energy, environmental, and environmental benefits of all options under consideration without explicitly eliminating options based on adverse impacts.
1. Environmental impacts Alth ough EPA has not recomm ended focusing on the environmental impacts of the pollutant that is the subject of the BACT analysis, w ith respect to CO 2 emission s from bioenergy facilities , EPA believes a different frame of reference should be considered because of the nature of the carbon cycle and the fact that the production of biomass entails carbon sequestration. Within the context of the PSD program, a potential justification that bi ogenic CO 2 emissions can be accounted for differently than non

- biogenic CO 2 emissions at the facility relies on the argument that sequestration occurs. Th is sequestration occurs offsite, outside the boundaries of

35 1990 Workshop Manual at B.29. 36 1990 Workshop Manual at B.30. 37 In re Knauf Fiber Glass, 8 E.A.D. at 131 n. 15.21

the facility. Therefore, given its tradi tional focus on “collateral” environmental impacts and benefits, Step 4 of the BACT analysis seems well

- suited to enable permitting authorities to consider the potential sequestration of carbon in biogenic resources outside the boundaries of the facility w hen evaluating BACT for greenhouse gases

. This approach was reinforced by CFI comments, which emphasized the importance of reconciling the focus of the PSD and Title V program regulations on the amount of emissions released from each individual facility w ith the role that land

- based sequestration may play in mitigating the net atmospheric GHG impact of emissions from individual sources. Because other pollutants and non

- CO 2 GHGs do not participate in natural biogeochemical carbon cycles to the same extent that CO 2 does, this frame of reference

– in which the potential for sequestration outside the facility of pollutant subject to the BACT analysis is considered as part of the environmental impacts at Step 4

– is not relevant for those other pollutants. In addition to using this frame of reference in which sequestration outside the boundaries of the facility is considered, it may also be appropriate to consider broad categories of feedstocks in terms of their net impact on atmospheric GHG stocks. A complete accounting of the net atmospheric GHG impact of a facility utilizing particular feedstocks would rely on a case

- by

case, facility

- specific assessment of the impact of the proposed facilit y . This type of facility

specific approach would also likely be the most scientifically sound approach for assessing the direct carbon cycle impact of specific biogenic fuels used at the facility, because t here is inherent variability in biological proces ses, as well as the variability in space and time common to estimates of sequestration. The BACT analysis should consider a variety of factors that may influence the net amount of carbon added to the atmosphere from and utilization of bioenergy at a fac ility. An22

important area of consensus from commenters on the CFI was the idea that feedstocks are different, and that the net impact of bioenergy and other biogenic emissions is associated with the feedstock that is used. The level of sequestration that occurs naturally on the landscape without additional intervention can be considered the “business as usual” (BAU) case. In other words, this level of sequestration (or emissions) will likely continue into the future without additional action. For exampl e, if enhanced plant growth cause s sequestration to increase beyond the level expected in the BAU case for that region , then more carbon will be taken out of the atmosphere than expected in the BAU cas e. Similarly, if certain activities, such as logging ,

are accelerated in a particular region over a certain period of time, and associated emissions are thereby increased, then sequestration on land will decline and net atmospheric carbon stocks will increase over the BAU case

. For bioenergy and other biogenic CO 2 emissions, where such a wide variety of potential feedstocks exists, the BAU case might be considered the emissions that “wou ld have happened anyway.” Using this approach, a permitting authority would have to assess the extent to which a poli cy action or an activity increases or reduces CO 2 emissions above or below what would have occurred in comparison to the BAU case

. From the perspective of bioenergy and other biogenic CO 2 emissions , emissions that would have occurred regardless of whethe r or not the facility captured the energy from the biofuel use or carried out the process using biological material as a feedstock might demonstrate that the cost of additional pollutant controls for CO 2 emissions is not justified. Land use change has a separate set of considerations under the BAU case. Specifically, if the rate of transition of land use from forest to agricultural use were to increase over and above that which occurred in the BAU case, and if this increase were attributable to market d emand for the bioenergy crop, then it would be possible that these emissions would be additional to the23

emissions expected under BAU . In that situation, the BAU case is the non

- bioenergy case, such that the bioenergy use might result in increased atmosphe ric CO 2 levels

. However, such a case - by

- case analysis of the net atmospheric impact of biomass fuels would likely be prohibitively time

- consuming and complex for facilities a nd permitting authorities. T he information we have collected to this point indicates that at present, attempting to determine the net carbon cycle impact of particular facilities combusting particular types of biomass feedstocks would require extensive analysis and would therefore entai l extensive workload requirements. Further, additional detailed examination of science and technical issues is needed to ensure that permitting authorities would be able to reasonably calculate and implement accounting for the amount of GHG emissions abov e BAU in particular instances, or to assure consistency among the calculation methodologies of the various permitting authorities. Given the challenge of conducting a complete analysis for each permit application, a more practical approach to accounting i s needed. Absent this, the burden on permitting authorities is likely to be overwhelming. For at least one category of biomass feedstocks that may be used in energy production, it does appear possible at this time to conclude that the atmospheric impact is negligible. Some
commenters on the CFI suggested that utilizing mill residue (e.g. sawdust, planar shavings, panel trim) to generate energy , rather than leaving the residue to decompose , likely would not cause emissions over and above that which would have taken place if the energy use did not occur. Given that this material would have decomposed under natural circumstances in a short period of time ( e.g. , 10

- 15 years) in the absence of utilization as bioenergy, this conclusion appears credible.24

I n some cases, the u se of biological material as a fuel would clearly reduce net atmospheric CO 2 stocks in comparison with BAU fossil fuel emissions. In these cases, requiring permitting at this time, before conducting the detailed analysis required to dev elop an appropriate accounting system for bioenergy and other biogenic sources, might actually discourage projects that would have a net benefit for the atmosphere. For example, requiring permitting for facilities seeking to generate energy from the combu stion of dead trees, especially those killed due to a widespread event like the mountain pine beetle epidemic (that would emit CO 2 anyway through natural decomposition ), is likely to discourage the utilization of a readily available resource that would clearly reduce CO 2 emissions, in comparison with BAU fossil fuel

- related emissions. In November 2010, EPA said it would provide guidance containing qualitative information on useful issues to consider with respect to biomass combustion, such as specific fe edstock types and trends in carbon stocks at different spatial scales ( e.g. national, regional, state). Upon further review, EPA has concluded that it requires further discussion with partners and scientists both inside and outside the federal government, as well as engagement with an independent scientific panel, before it can make more qualitative characterizations beyond the

one described above for residue material

. 2. Economic impacts As discussed earlier in this section, EPA has previously advised tha t the economic impacts component of BACT analysis should focus on direct economic impacts calculated in terms of cost effectiveness (dollars per ton of emission reduc tion)

. As noted in the 2010 GHG Permitting Guidance, EPA recognizes that at present add

- on controls for CO 2 are generally expensive technologies, largely because of the costs associated with CO 2 capture and storage

. A s with other electric generating facilities, these direct costs will generally make the price of25

electricity from bioenerg y used in conjunction with add

- on control technologies for CO 2 uncompetitive compared to electricity from plants with other GHG controls , such as bioenergy alone

. In addition to the direct economic impacts component of the BACT analysis , p ermitting authorities may also consider indirect e conomic impacts, including potential economic benefits. Such indirect considerations may include economic growth and the availability of employment opportunities generated within a particular region or community b y the utilization of biomass fuels . As EPA noted in the 2010 GHG Permitting G uidance, it is appropriate for permitting authorities to account for the underlying objectives of federal and state policies to foster expansion of renewable resources and promo te biomass. Tax incentives are an example of such policies. Where one of the underlying objectives of a tax incentive or other type of policy promoting renewable energy or biomass utilization is to foster economic growth and create jobs in particular are a, this may be considered as a relevant indirect economic impact or benefit that can be considered in Step 4 of a BACT analysis. Where selecting a particular option as BACT would further the goals of such policy, this may form part of the basis for select ing that option as BACT. Likewise, where the record shows that requiring a particular control option as BACT would counteract, or work at cross purposes from, policies that are intended to promote renewable energy and biomass, this may form part of the ju stification for eliminating an option from further consideration at Step 4 of the BACT analysis. Many federal and state policies , along with a number of regional efforts, are currently underway to foster the expansion of renewable resources and promote bi o energy projects as a way of addressing climate change , increasing domestic alternative energy production , enhancing forest management and creating r elated employment opportunities. For example, the federal26

Renewable Electricity Production Tax Credit, a p er - kilowatt

- hour tax credit for electricity generated by qualified energy resources including biomass, was originally enacted by the Energy Policy Act of 1992 (largely by amending the Internal Revenue Code of 1986). Numerous pieces of federal legislation, the most recent being the American Recovery and Reinvestment Tax Act of 2009, have since been passed to extend certain related expiring tax provisions and expand the scope of qualified biomass feedstocks, with the duel aims of domestic job creation and economic stabilization. 38 , 39 Such policies can improve the economy, especially in rural communities, by generat ing jobs, income, and taxes through demand for local biogenic resources and construction of bio energy conver sion facilities. Specifically, an im proved market for bio genic fuels and forest land could affect economic stabilization through increased incomes (from new jobs), higher local tax base and possibly through the diversification of local energy sources , and increased competition could lower en ergy prices.
As an other example of such economic impacts, the Record of Decision for the Biomass Crop Assistance Program (BCAP)

– a program created by the 2008 Farm Bill that provides financial assistance to biomass conversion facilities and owners of agr icultural and non

- industrial private forest land who wish to establish, produce, and deliver biomass feedstocks

– estimated the total economic impact from broad BCAP implementation to include $88.5 billion in related economic activity and the c reation of nearly 700,000 jobs. 40 Other potential indirect economic considerations from biomass utilization as BACT could include, but are not limited to, increased

38 American Recovery and Reinvestment Tax Act of 2009 . The Library of Congress. h ttp://thomas.loc.gov/home/h1/Re covery_Bill_Div_B.pdf 39 H. R. 1424 Emergency Economic Stabilization Act of 2008 . The Library of Congress. http://thomas.loc.gov H. R. 4520 American Jobs Creation Act of 2004 . The Library of Congress. http://thomas.loc.gov H. R. 3090 Job Creation and Wor ker Assistance Act of 2002 . The Library of Congress. http://thomas.loc.gov 40 USDA Farm Service Agency. 2010. www.apfo.usda.gov/FSA Programmatic Environmental Impact Statement for the Biomass Crop Assistance Program. 2010. http://public.geo

marine.com/report.aspx?id=2627

demand for traditional or new biogenic crops and reduced disposal costs for bio genic materials that wou ld otherwise be landfilled or destroyed.
3. Energy impacts With respect to energy impacts, the BACT analysis should assess the relative energy demands of the options under consideration for reducing emissions from t he facility obtaining a permit and may include an evaluation of impacts on fuel scarcity or a locally desired fuel mix in a particular area. For bioenergy facilities, it is appropriate to broaden the scope of the energy impacts analysis to consider policies that seek to promote diversity in fu els used in a local area, within a state, or nationally. A variety of federal and state policies have recognized that some types of biomass can be part of a national strategy to reduce dependence on fossil fuels. Renewable fuels policies, which in some cases provide incentives for the substitution of renewable fuels for fossil fuels, have not traditionally been part of the BACT energy impacts analysis. However, consideration of renewable energy policies could become part of the BACT analysis, especially if state policies mandate the replacement of fossil fuel with biogenic fuel. 41 In addition to numerous federal
programs, as of February 2011, 48 states have some kind of state

- level financial or conservation incentive program that includes biomass production and almost as many states have rules, regulations or policies that promote bioenergy use

. 42 For example, certain states, such as California 43 , Washington , 44 and Massachusetts 45 have policies and programs to incentivize forest

41 See p. B.30 of the 1990 NSR Guidance, discussing locally scarce fuels. 42 Database of State Incentives for Renewables & Efficiency. Accessed February 1, 2011. www.dsireusa.org/incentives/ 43 2009 Progress to a Plan: Bioenergy Action Plan for California. California Energy Commission. 2009. www.energy.ca.gov/2010publications/CEC

- 500

- 2010

- 007/CEC

- 500

- 2010

- 007.PDF Integrated Energy Policy Report. California Energy Commission. 2007. www.energy.ca.gov/2007publications/CEC

100

- 2007

- 008/CEC

- 100

- 2007

- 008

- CMF.PDF28

management for biomas s production. California, for example, as of 2009, has the technical potential for 14.2 million bone dry tons a year available from forest residues. 46 After trees are harvested for timber, such forest residues are typically left in the forest or disposed o f via open burning because only timber of a certain quality can be used in lumber mills and other processing facilities. An advantage of using forest residues for bioenergy production is that a collection infrastructure is already in place to harvest the wood, it reduces the incidence of open burning and provides an additional stream of revenue for forest owners. Programs and policies established to meet the multiple goals of forest management plans

-- to establish healthy and naturally diverse forests wi th a balance between productive harvest and natural ecosystem and wildlife health

– can act as a foundation for sustainable bioenergy production. 47 Conversely, if the proposed biogenic feedstock is scarce in the localized area of the proposed project, then the scarcity of available fuel for the project might be an energy impact suggesting that the proposed feedstock should not be selected as BACT.
C. Potential Conclusions in Step 4 Analysis The considerations described above can support a conclusion that the exclusive utilization of biomass fuel is BACT for greenhouse gases at a bioenergy facility. As discussed above and in earlier EPA guidance, the costs of applying add

- on pollution controls for greenhouse gas emissions are expected to be expensive and thus would in most cases justify
Senate Bill (SB) 71 . Economic Development: Sales And Use Tax Exclusions. Environmental Technolo gy Project California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA). www.treasurer.ca.gov/caeatfa/sb71/index.asp 44 Washington State Bioenergy Policy Framework

. www.bioenergy.wa.gov/BiofuelIncentives.aspx 45 Massachusetts Green Power Purchasing Commitment, 2007, and Renewable Portfolio Standard. 2010. www.dsireusa.org/incentives/index.cfm?EE=0&RE=1&SPV=0&ST=0&implementingsector=S&state=MA&technol ogy=Biomass&sh=1 Act Related to Green Communities. Commonwealth of Massachusetts. 2 008. www.malegislature.gov/Laws/SessionLaws/Acts/2008/Chapter169 46 2009 Progress to a Plan: Bioenergy Action Plan for California. California Energy Commission. 2009. www.energy.ca.gov/2010publications/CEC

- 500

- 2010

- 007/CEC

- 500

- 2010

- 007.PDF 47 California Forest Practice Rules. The California Department of Forestry and Fire Protection. 2011. www.fire.ca.gov/resource_mgt/downloads/2011_FP_Rulebook_with_Diagrams_with_Tech_Rule_No_1.pdf.29

elimination of this option based on direct economic impacts. However, EPA does not expect that the projected cost of energy efficient technology will by itself justify eliminating this option for biogenic CO 2 emissions from co nsideration at bioenergy facilities. Nevertheless, where a bioenergy facility is projected to provide the energy and economic benefits described above in accordance with existing federal or state policies promoting utilization of biomass for energy produc tion, these considerations may justify selecting the option of exclusively using a biomass fuel as BACT for biogenic CO 2 emissions from a bioenergy facilit y . Furthermore, in the case of residue material that would otherwise decompose in a 10

- 15 year time frame, the net carbon cycle impact of this biomass fuel is expected to be negligible. Thus for a feedstock composed of such residue material, the costs of applying strategies to reduce emissions from the facility do not appear justified at this time beca use the carbon dioxide emissions from the individual facility would not be increasing atmospheric impacts above the business as usual case . As discussed above, additional information is needed before similar conclusions can be supported for other types of biomass feedstocks, but EPA believes the energy and economic benefits of this fuel is sufficient at this time to justify selecting biomass fuel as BACT for greenhouse gases without further control. 48
For facilities that are co

- firing biomass with a primar y fuel, the permitting record should provide a reasoned justification for basing BACT for greenhouse gases on a specific proportional

48 This guidance is applicable to an assessment of BACT for greenhouse gas es. When conducting a BACT analysis for other regulated NSR pollutants at the type of source covered by this guidance, EPA recommends continuing to focus on guidance EPA has previously provided on determining BACT using the top

- down process. The consider ations described here, in terms of federal and state incentives for bioenergy production and sustainable forest management, may still be relevant considerations in Step 4 of a top

- down BACT analysis for another regulated NSR pollutant, but these factors sh ould be considered in the context of the particular pollutant for which the BACT analysis is conducted. These considerations may not apply in the same manner to pollutants other than GHGs, particularly where there is a more established record of the range of costs that have been acceptable in previous BACT determinations for the pollutant.30

allocation of fuels. 49 The factors described above may be used to justify a higher proportional allocation of biomass fuels as BACT (to the extent technically feasible) but not necessarily to eliminate other strategies for reducing greenhouse gas emissions from a facility tha t utilizes some proportion of fossil fuels. The costs of add

- on pollution controls will still , in most cases , justify eliminating this technology from a facility that utilizes biomass and another primary fuel type. However, application of methods, syste ms, or techniques to increase energy efficiency will remain a key GHG

- reducing opportunity for facilities that utilize a significant proportion of fossil fuels and cannot demonstrate the same degree of energy and economic benefits achieved from the exclusi ve utilization of the biomass fuels, as described above. While some utilization of biomass fuels will have some impact on reducing dependence on fossil fuels and promoting economic growth in areas that supply biomass fuels, a small proportion of biomass f uel use may not justify bypassing opportunities to reduce GHG emissions by improving energy efficiency at a facility that still combusts a significant proportion of fossil fuels. However, when assessing the proportional allocation for biomass and other fu el types at a co

- fired energy facility, a permitting authority may consider the relative benefit of using a greater proportion of biomass fuels and the effect this may have on GHG emissions from an individual facility. Where a residue material is utilized , any loss of energy efficiency attributable to the use of this type of biomass feedstock may be offset by the absence of a significant net carbon cycle impact above the business as usual

case . IX . Step 5

– Selecting BACT

49 See, In re: Northern Michigan University Ripley Heating Plant. PSD Appeal No. 08

- 02, Slip. Op at 18

- 23, 28 (EAB 2009) (remanding a permit for a co

- fired electric gen erating facility where record did not contain justification for establishing BACT limits based on specific proportional allocation of wood and coal).31

When setting GHG emissions limitations for sources of bio genic CO 2 emissions, one should conduct the same evaluati on as that described in the 2010 GHG Permitting Guidance

. 50 The permitting authority is responsible for defining the form of the BACT limits a nd making them enforceable as a practical matter. 51 In determining the form of the limit, the permitting authority should consider issues such as averaging times and units of measurement. For example, in the case of co

- fired facilities, a final permit may include a standard that specifies the proportional allocation of fuels to be used, thus limiting the options to the fuel mix justified as BACT. When making sure the limit is practically enforceable, the permitting authority must include information regardi ng the methods that will be used for determining compliance with the limits (such as operational parameters, timing, testing methods, etc.) and ensure that there is no ambiguity in the permit terms themselves. 52 The permitting authority bears the responsibi lity in Step 5 to fully justify the BACT decision in the permit record. Regardless of the control level or feedstock proposed by the applicant as BACT, the ultimate determination of BACT is made by the permitting authority.

50 2010 GHG Permitting Guidance at 45

- 47. 51 See generally EPA Guidance on Limiting Potential to Emit (PTE ) in New Source Permitting (June 13, 1989), available at http://www.epa.gov/reg3artd/ permitting/t5_epa_guidance.htm. 52 In re Prairie State Generating Company , 13 E.A.D. at 83, 120.32

Appendix: LU LUCF data from t he Inventory Table 1 : Carbon sequestered by LULUCF sinks as reported in the Inventory (Tg CO 2 Eq.) 53 , ranked in order of magnitude. Forest Land Remaining Forest Land has been further broken up into forest and harvested wood carbon pools. IPCC Source Category LULUCF Sink 2008 *1990
– 2008 Average

Forest Land Remaining Forest Land (Carbon Stock Changes) Total Forest Sector C Stock Change (791.9) (688.0)
Forest (703.9) (576.7) Aboveground B iomass (397.2) (373.5) Soil Organic Carbon (145.9) (68.0) Belowground B iomass (78.8) (74.1)
Litter (55.9) (35.8)
Dead Wood (26.2) (25.3)
Harvested Wood (88.0) (111.2)
SWDS (63.6) (63.7)
Products in U se (24.4) (47.6) Settlements Remaining Settlements C Stock Changes in Urban Trees (93.9) (75.5) Cropland Remaining Cropland Soil C Stock Changes for Mineral Soils (45.7) (51.5)
Land Converted to Grassland Soil C Stock Changes for Mineral Soils (25.1) (24.0) Grassland Remaining Grassland Soil C Stock Changes in Mineral Soils (12.4) (23.3)

Other Changes in Yard Trimming and Food Scrap C Stocks in Landfills (9.5) (13.6)

Gross Sequestration from LULUCF Sinks (978.5) (875.9)
* The U.S. Greenhouse Gas Inventories submitted to the UNFCCC provide annual estimates from 1990.

53 The Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990

– 2008 (April 2010) and the archive of previous inventories are available online from the Environmental Protection Agency Inventory Report Web site, located at http://www.epa.gov/cli matechange/emissions/usinventoryreport.html

.33

Table 2 : Emissions from LULUCF sources as reported in the Inventory (Tg CO 2 Eq.), ranked in order of magnitude. IPCC Source Category LULUCF Source 2008 *1990
– 2008 Average Cropland Remaining Cropland Soil C Stock Changes in Organic Soils 27.7 27.6 Forest Land Remaining Forest Land Non

- CO 2 Emissions from Forest Fires 21.7 15.7
Land Converted to Cropland Soil C Stock Changes for Mineral and Organic Soils 5.9 2.8
Cropland Remaining Cropland Liming of Agricultural Soils 3.8 4.4 Cropland Remaining Cropland Urea Fertilization 3.8 3.1 Grassland Remaining Grassland Soil C Stock Changes in Organic Soils 3.7 3.7 Settlements Remaining Settlements Direct N 2 O Fluxes from Settlement Soils 1.6 1.2
Wetlands Remaining Wetlands CO 2 an d N 2 O Emissions from Peatlands Remaining Peatlands 0.9 1.0

Land Converted to Grassland Soil C Stock Changes in Organic Soils 0.9 0.8 Forest Land Remaining Forest Land Direct N 2 O Emissions from Forest Soils 0.4 0.3
Gross Emissions from LULUCF Sources 70.4 60.6
* The U.S. Greenhouse Gas Inventories submitted to the UNFCCC provide annual estimates from 1990.